Regional clusters can spark growth

If you want to see how American communities can reinvent themselves to compete in today’s global economy, just walk through downtown Pittsburgh. Once abandoned steel plants now house a thriving cluster of innovative robotics companies.

This didn’t randomly happen. Pittsburgh’s leaders made a concerted effort to develop a regional economic cluster as the centerpiece of the city’s economic development strategy.

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Today, it is one of the nation’s high-growth regional innovation clusters — groups of companies, educational institutions, municipalities, sometimes even states, working together to create the best possible climate for business.

Often centered on a specific group of industries — like the life sciences cluster in Boston, the IT hub in North Carolina’s Research Triangle or the optics cluster in Arizona — clusters are one of the best ways for local communities to attract and develop high-growth businesses to create the jobs they need. Reports show that companies operating within clusters create more jobs, pay higher wages, expand faster and generate more patents than isolated firms. New business formation is also centered within clusters, and start-ups in a strong regional cluster grow faster.

Clusters provide a crucial answer to the question on everyone’s mind: How do we get the U.S. economy growing again and put people back to work?

In communities across the country, mayors, economic development professionals, entrepreneurs and university leaders are searching for ways to attract businesses, new industries and new jobs.

The Obama administration is providing one path by making significant investments in these regional clusters. We are building on regional differences and strengths, while encouraging local initiative and ownership.

The administration recently announced the winning projects of its $37 million Jobs and Innovation Accelerator Challenge, a multiagency competition to support the advancement of 20 high-growth regional industry clusters. These public-private partnerships, across 21 states, are designed to promote development in specific areas — including advanced manufacturing, information technology, aerospace and clean technology.

They are expected to create more than 4,800 jobs and 300 new businesses, as well as retain another 2,400 jobs and train roughly 4,000 workers for careers in high-growth industries.

This is the type of federal investment that President Barack Obama’s jobs act calls for — to help put Americans back to work and strengthen the nation’s economy. In addition, the initiative demonstrates how federal agencies can work together and leverage existing resources to enhance local efforts — making government work better for the American people.

The Economic Development Administration is now working with Harvard Business School’s Institute for Strategy and Competitiveness to produce an interactive geographic map that captures regional clusters and cluster-based initiatives across the nation. Once complete, this tool can identify and connect regional innovation clusters, enhancing the capacity of policymakers, practitioners and industry leaders to accelerate growth.

We can no longer focus on the “build it and they will come” mentality of our predecessors. We can’t continue to focus on competition between our cities and states. These strategies won’t work in the 21st century’s global economy.

We must concentrate instead on innovation and entrepreneurship as the drivers of regionally focused strategies to make the nation more competitive.

Every American region can — and should — be an economic success story. We can — and will — out-innovate, out-build and out-compete our rivals. Investing in clusters is one key step forward.

John Fernandez, former mayor of Bloomington, Ind., is assistant secretary for Economic Development at the Commerce Department. He heads the Economic Development Administration.